A motion to dismiss the lawsuit against Life Care Centers of America Inc. has been denied by a federal judge in Chattanooga.
The original suit filed in 2008 by Glenda Martin, then joined by the state and the U.S. governments, claims Life Care pressured its therapists to target “Ultra High RUG levels and longer average length of stay periods in order to maximize its Medicare revenue and exhaust all 100 days of [a patient’s] Medicare [skilled nursing facility] benefit.”
According to information provided by the Department of Health and Human Services, beneficiaries who require the highest level of therapy are categorized into ultra high therapy RUGS, (resource utilization groups) which “generally have the highest per diem rates.”
In support of the claim, the government is asserting several items against Life Care.
The claim states Life Care generated reports that tracked Ultra High RUG percentages, average length of stay levels, and productivity levels; set targets at the corporate level for the amount of Medicare rehabilitation days it would bill at the Ultra High RUG level without knowledge of individual patient needs; had its chief operating officer “push for increased Medicare revenue;” had at least one regional rehab director contact rehab managers that did not have Ultra High RUG percentages above 61 percent to create an action plan to create higher RUG levels; set a 2-hour minimum level of therapy per day “unless proven otherwise;” had certain divisions establish a “$400 club” for employees who booked daily Medicare rates of $400; and rewarded employees who met higher RUG levels.
Life Care argued the claims should be dismissed on a number of counts.
It alleged the government’s claim does not allege a “false” claim and that its actions were “consistant with regulatory requirements and guidance.”
U.S. District Judge Harry S. Matrice Jr. found the complaint contains “sufficient factual allegations” to plead the claim.
Life Care also argued the complaint “does not satisfy” the Federal Rule of Civil Procedure because it is not specific as to the alleged scheme or the fraudulent intent of the defendants.
“Although the government’s overarching theory of its case is that [Life Care] had a corporate scheme to perpetuate false or fraudulent claims, the government sets forth details and factual allegations within its complaint sufficient to satisfy the element of both of its claims,” the judge wrote.
“The government does not assert that [Life Care] was filing false of fraudulent claims for a significant period, but it [does detail] specific dates, locations and persons supporting its claims.”
A hearing to determine the government’s motion to partially exclude one testimony and the defendant’s motion to exclude the testimony of one expert witness is scheduled for May 13.
The orignal suit sought civil penalties of between $5,500 and $11,000 for each violation with Martin, termed a “whistleblower,” to receive between 15 to 30 percent of the potential settlement and/or penalties incurred.